Michael Pascoe’s business week

The surprising surge in Chinese exports: If the Dragon fires up, the kangaroo hops.

Among the major sectors, materials slumped 1.4 per cent, energy stocks lost 0.2 per cent, while financials ended flat.

IG Markets market strategist Evan Lucas said sentiment had turned negative following Chinese data showing that inflation came in at a slightly higher than expected 2.6 per cent for 2012, but had increased in December indicating no stimulation is likely soon.

However, that was offset by the other major regional economy Japan, whose premier Shinzo Abe unveiled a $US226.5 billion ($215 billion) stimulus package.

‘‘That helped our market move off its lows and it ramped up,’’ Mr Lucas said. ‘‘But we had some profits locked in, weighing on the mining sector, despite the iron ore price still sitting at $US158 a tonne.

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‘‘It was a bit of a mixed market despite strong leads from the US ... a lot of people are watching what will happen with corporate earnings week there.’’

The mining giants extended their falls in the afternoon. BHP Billiton led the falls, losing 73 cents, or 1.95 per cent, to $36.68, Fortescue fell 12 cents, or 2.5 per cent, to $4.73 and Rio Tinto tumbled $1.30, or 1.9 per cent, to $65.80.

Cyclone Narelle strengthened into a category 4 storm, shutting ports handling a fifth of the world's globally traded iron ore and cutting supplies of natural gas and oil on Friday.

"Underperformance in the big iron ore miners has been the main theme of the day and has been weighing on the overall market's performance," said Stan Shamu, market strategist at IG Markets.

The four major banks were mixed.ANZ gained 10 cents to $25.25, National Australia Bank jumped 14 cents to $25.57, Westpac lost two cents to $26.58 and Commonwealth Bank dived 23 cents to $61.38.